Imagine that you bought 1000 shares of stock in Jimmy Co., a large publicly traded pharmaceutical company at $50 per share. Before you bought your stock, Jimmy Co.’s officers had been claiming that a new drug that was being developed would greatly enhance the ability to treat the plague. They predict that the drug will sail through the FDA testing because the drug is perfectly safe and the manufacturing process is up to code. They will get approval and be on the market in two years. Their stock price has been rising ever since that announcement and is now where you bought it, at $50. Continue reading
